California Healthcare Reform: A Few Slices are Better than None
by Alan Katz

After months of wrangling, the odds are looking dim for a negotiated compromise on comprehensive healthcare reform this year. Governor Arnold Schwarzenegger still talks about a deal and Speaker Fabian Nunez continues to hold out hope. But most observers have grown increasingly skeptical. I am reluctantly among them.

The work to date will be a starting point for the next push for reform, which I hope will begin next month. It would be a shame if the issue were completely pushed aside in 2008.

In the meantime, there’s substantial bi-partisan support for cost containment measures, which could be enacted independently of wider reforms. There’s recognition that California should not have the lowest Medicaid reimbursement rates in the country — the California Hospital Association is even willing to help fund an increase. If the President and Congress ever end their shameful delay in reauthorizing the State Children’s Health Insurance Plan (SCHIP), California should find a way to improve outreach for its Healthy Families program.

Increasing federal healthcare dollars coming to the state makes sound financial sense, as would improving Medicaid reimbursements. Providing more children access to healthcare is not only sound public policy, but also pays financial dividends in the long run.

Governor Schwarzenegger, frustrated with the failure to achieve meaningful healthcare reform through the Legislature, is considering putting the matter to voters on the November 2008 ballot. This may be more of a negotiating tactic than a commitment to a bruising campaign, but what if he’s serious? Could the Governor actually get an initiative passed? I don’t think so.

First, history is against him. While healthcare reform may be popular, it certainly isn’t simple to understand. This could explain why five healthcare reform initiatives have failed in the past 15 years.

To have any chance of success, the Governor and his team will need to determine what provisions to include in the ballot measure. His current proposal reflects compromises he’s made to close the gap with Democratic negotiators. Some of them are not very popular with his traditional supporters. Then there are the many flaws in the Governor’s proposal, such as the lack of meaningful enforcement of the individual mandate, the lack of an affordability exemption, and the structure of the purchasing pool. He will need to fix them or risk providing opponents with easy avenues of attack.

Another problem the Governor’s initiative will face is the timing of the election — November 2008. The budget process next summer will be bruising in the face of the $10 billion deficit California faces. If it’s half as ugly as the most recent budget fight, which centered around $700 million in cuts, how likely are voters going to be to entrust Sacramento with a new $14 billion program?

The presidential campaign culminating at that time will involve a forceful debate on healthcare reform. If voters believe the next president will enact national healthcare reform why go through the bother of implementing changes on the state level when they’re destined to be preempted? The Governor might be better served by finding a legislative solution.
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Alan Katz is a past president of both the National and the California Association of Health Underwriters. In 2003, NAHU named Alan the Health Insurance Person of the Year, awarding him that year’s Harold R. Gordon Memorial Award. To read Alan’s Blog, visit http://alankatz.wordpress.com.